Human Opportunity Index

My colleague and (I hope still) friend, Chico Ferreira recently took the trouble to write a comment on my earlier LTD post on measuring inequality of opportunity in the context of human development. Early on in his comment, Chico also paid me the compliment of a being a “clever guy”, which was nice until I read on and found that while he agreed with some of what I said there was a lot he didn’t like. Now Chico is a really clever guy, and this is an area he knows a lot about. So I realize I’m treading on thin ice when I say I’m not completely convinced about his ripostes. But let me take the risk. Chico’s not just super-clever – he’s also very nice. So if the ice cracks and I fall in, I think there’s a good chance he’ll pull me out.

I was asked recently to advise on some ongoing work on human development, equal opportunities, and universal coverage. The work was building on previous work undertaken by the World Bank in its Latin America and the Caribbean (LAC) region that had developed a new index known as the Human Opportunity Index (HOI).

The core idea underlying the HOI isn’t new. The argument is that inequalities are inequitable insofar as they’re the result of circumstances beyond the individual’s control (inequality in opportunity), but not if they reflect factors that are within the individual’s control. The object of the exercise is to separate empirically the two.

More than ten years ago Ronald Inglehart, of the University of Michigan, and his team at the World Values Survey asked thousands of respondents around the world to rate their views, on a scale of 1 to 10, on whether they felt inequality in their countries should go up or down. The way they phrased the question was that 1 corresponded to full agreement with the statement that “incomes should be made more equal”, whereas 10 stood for “we need larger income differences as incentives for individual effort”.